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IndusInd Bank sells Vasan Healthcare loans to Edelweiss ARC

LiveMint 18-06-2017Deborshi Chaki

Mumbai: IndusInd Bank, the largest lender to troubled Vasan Healthcare Pvt. Ltd, has sold its entire exposure in the company to Edelweiss Asset Reconstruction Co. (EARC), two people aware of the development said on the condition of anonymity.

The transaction was confirmed by EARC although it did not disclose the financial details or the percentage of Vasan’s loans it bought. “Edelweiss ARC has bought a small share in debt from IndusInd bank in a portfolio,” an EARC spokesperson said in response to a query. An email sent to IndusInd Bank remained unanswered till the time of going to press.

“With this, the efforts to find a buyer for Vasan has ended as far IndusInd Bank is concerned,” said one of the two people cited above.

IndusInd Bank, which owned the largest chunk of Vasan Eye Care’s Rs1,100 crore outstanding loans, was on the lookout for a buyer to take over majority control of the company,” said the first person. “While a number of potential buyers were interested, the deal did not close given the controversies surrounding Vasan Eye Care,” said the person.

Currently, two of Vasan’s minority investors—PE funds Sequoia Capital and Westbridge Capital—are under investigation by the Enforcement Directorate (ED) for their respective investments in the company. The charges are being contested by both PE funds. Vasan Healthcare, which operates one of the largest eye care clinic chains under the brand name Vasan Eye Care, has been in the eye of controversy over allegations of money laundering and its links to Karti Chidambaram, son of former finance minister P. Chidambaram.

According to the persons cited above, the lenders were seeking a valuation of close to Rs1,500 crore for the eye care chain which is roughly 15 times its Ebitda and were in separate talks with two global PE funds initially. However, both firms backed out later citing the ongoing regulatory issues faced by the company. “Subsequently, the lenders led by IndusInd Bank also approached a few regional healthcare companies to sell Vasan’s assets in a piecemeal basis but those discussions too remained inconclusive,” the person added.

According to its last available financial results with the Registrar of Companies, Vasan Healthcare incurred a loss of Rs50.3 crore against revenue of Rs728 crore for FY14. In the same year, the company incurred operating expenses of Rs597 crore and interest cost of Rs 85 crore.

In April, Business Standard reported that ED has served notices on Vasan Healthcare and Karti Chidambaram for breach of the Foreign Exchange Management Act (FEMA).

EARC is currently one of the most active distressed assets buyers. In March, it bought loans worth Rs5,000 crore of 14 companies at close to Rs2,200 crore. It is among the shortlisted bidders to buy a controlling stake in Uttam Galva Steels Ltd and plans to invest up to Rs10,000 crore in distressed deals over the next four years.